Strategy: Buy n Puts, Expire ≥ 90 DTE
Price Chart: Downtrending
Current IV%: ≤ 25%
IV Rank: ≤ 30
Trade: Buy one or more put options.
Typical Strike Delta: ≥ −0.45 to −0.55
Goals: A strong drop in the price of the underlying is required to move the long put deeper ITM, which increases premium value.
Manage: If the long put moves deeper ITM according to the trader’s bearish bias, it is sold for substantially more premium than originally paid. If the price of the underlying begins to rally, sell the long put and consider buying a long call to take advantage of the price increase.
Profit: Close when this trade returns a profit of 30 percent or more.
Loss: Close when this trade approaches an 8 percent loss.